Ahead Of Google Earnings, A Look At Options And Expectations
With everyone's eyes glued to Google earnings after the close, below is a representation of the most active options classes today: the top 3 contracts traded were all near-term (Friday expiration) calls with 550, 540 and 560 strikes. It is not immediately known if investors are setting themselves up bullishly (buying calls) or bearishly (selling calls), although with the price of the entire top 10 complex down, except for the Oct 530 puts, it does appear that bearishness may be dominant. Whether or not the option action is a material factor for Google's underperformance is also not clear.
Keep in mind, in terms of a successful report, investors will be looking for (mean consensus estimate) revenue of $4,248 million and EPS of $5.431 for Q3, a 33.77% increase over Q3 2008. However, what is notable is that over the past 10 quarters, Google has never surprised to the upside based on consensus EPS: maybe the executive committee can take some tips from Steve Jobs on how to manage expectations.